This consultation is the first in a series of papers expected from the regulator this year focusing on the UK’s onshored MiFID/R regime governing investment services. These consultations aim to progress the strategic policies set out by HM Treasury in its Wholesale Markets Review, and to strengthen the competitiveness and efficiency of UK financial markets whilst upholding high investor protection and regulatory standards.

In this live consultation, which closes on 16 September 2022, the FCA seeks input from industry across the following five topics as they relate to UK secondary equity markets:

• Post-trade transparency
• Waivers from pre-trade transparency
• Tick size
• Improving market-wide resilience during outages
• The UK market for retail orders                                                                                                            

We are encouraged by the spirit of the proposals put forward in this consultation, which reflect our engagement with the FCA and with HM Treasury over the past year inviting a proportionate recalibration of certain areas of the UK’s markets rulebook.

A key area of focus in our engagement, and in the work of our MiFID Strategic Committee which harnesses expertise from across the capital markets and wholesale industry, has been to analyse post-trade transparency reporting. Having identified that current post-trade transparency reporting requirements create inefficiencies and operational complexity, we developed a super-reporter framework proposal. This proposal was presented to HM Treasury in our response to the Wholesale Markets Review in September 2021.

Under the model we have proposed, post-trade reporting obligations would be decoupled from a firm’s systematic internaliser (SI) status, creating instead a ‘super-reporter’ status, for which firms could register at entity or by individual asset class. This would enable market participants to swiftly identify who is responsible for reporting a trade. The adoption of such a regime would drive market efficiency and foster dynamic UK secondary equity markets, serving investors and firms of all sizes.

Having initially presented the super-reporter proposal to HM Treasury last year, we continued to develop a more comprehensive policy solution. Discussions were coordinated with industry partners, including the International Swaps and Derivatives Association (ISDA) and the Association for Financial Markets in Europe (AFME), with industry representatives from both buy-side and sell-side analysing how such a framework could operate.

We therefore welcome the FCA’s consultation and is pleased to see the FCA propose a ‘designated reporter’ regime for post-trade transparency that closely aligns with our recommendations.

We look forward to working with members and the FCA over the coming months, in particular to propose refinements to the ‘designated reporter’ regime. This will ensure that the laudable objectives that underpin the CP22/12 proposals can be fully achieved for the benefit of UK secondary equity markets.

For more information, please contact ayesha.ghafoor@ukfinance.org.uk.